EUROPE NEWS: All about clubs

Pradera, the pan-European retail property specialist with €2.2 billion in assets under management, is not alone in finding its plans for a private equity-style fund morphing into something else. In the face of real opposition to traditional fund structures by large investors and a move towards greater control, the London-based firm has had to respond accordingly. Therefore, instead of raising its next generation of funds, Pradera has found itself recently structuring single-investment mandates and club vehicles.

In an interview with PERE, founder Paul Whight said the firm was launching two vehicles this year – the Pradera Turkish Portfolio Club and the Pradera Outlet Mall club. These are in addition to the Pradera Open Ended Retail Fund, which is targeting smaller retail assets.

“The world is now about clubs,” Whight said. “Investors with fire power are going into clubs or single mandates. We like to have control, but there is no problem in having large investors effectively sitting on our investment committee.”

In 2008, Pradera’s original game plan was to raise a UK retail park fund. In the end, however, it settled upon a £75 million single mandate with AEW Europe via its opportunistic vehicle, EPISO, which was managed by Ric Lewis.

“Faced with another year of fundraising and documentation or £75 million straight away, it was not a difficult decision to make,” said Whight. The vehicle has gone on to acquire six retail parks in the UK.

Exactly the same thing happened last year. Originally looking to raise a retail park fund, Pradera in fact structured a single mandate with Brockton Capital, the London-based private equity real estate firm currently investing its second opportunistic fund. The Brockton opportunity fund has injected enough equity to assemble around £250 million of existing assets with solid income.

For its next ventures, Pradera already has decided not to go down the fund route, instead focusing on clubs or separate mandates. Whight said the firm has begun discussions with potential investors for a Turkish club, for which it is looking to secure assets. He noted that the firm is expecting initial equity to be around €100 million, though it could be €50 million to €75 million if the firm struck up an agreement with just one investor.

Meanwhile, the UK outlet club will seek existing factory outlets that sell branded clothing at a discount. It follows a recent agreement with Anschutz Entertainment Group Europe to develop a factory outlet centre next to the O2 Centre on land once set aside for a giant casino. For that new club, Pradera is in discussions with a potential financial partner.